Stripe comes to Canada with mobile credit card payment services
Stripe.com was started when two brothers joined forces in January 2010, when they were on a one-month school break, one was from the Massachusetts Institute of Technology and the other from Harvard University. The two programmed day and night in Buenos Aires, where the weather was much better and Wi-Fi was readily available.
The brothers went back to school, but both dropped out that summer, and made a full-time commitment to Stripe.
Stripe charges online retailers and mobile app developers 2.9 per cent plus 30 cents per transaction to collect credit card payments.
Stripe launched last September because of substantial venture capital funding from Sequoia Capital and PayPal's founders Elon Musk, Peter Thiel and Max Levchin, who sold their online payment system to auction giant eBay for $1.5 billion (USD).
Now that they had $38 million (USD), including an additional $5 million (USD) October 2012, the company has enough funding to continue with its expansion plans, which began in September 2012 when Stripe came to Canada.
The company rollout is happening fast and it will be less than a year before Stripe launches in one more market. In October 2012 Stripe had 32 employees.
I just posted another blog entry today about "Square" which is a competitor to Stripe. Stripe is certainly not alone with this push into these emerging mobile payment area.
Another competitor is Braintree, based in the US which has $34 million in funding from Accel Partners, which was one of the early financial backers of Facebook. Braintree has arrived in Canada, offering service in August 2012 as well as in 29 European countries.
The big advantage of Braintree is that that they can collect funds in 130 different currencies, while other services are typically limited to U.S. dollars or Canadian dollars.
These companies make money by charging monthly fee as well as a purchase percentage ranging from 2.29 per cent to 2.89 per cent as well as 30 cents per transaction. The charges can add up fast, but it is the convenience they are banking on.
These services are relevant because of the e-commerce balloon found among early-stage companies, they want to grow into new markets quickly, and don’t want to be held up by technology. These new services offer a way for them to start doing business quickly and easily with little investment in e-commerce technologies, because that is not their business.
Through distribution platforms such as app stores, the Android marketplace, and Facebook the sales for many new companies can easily reach international audiences. International mobile e-commerce transaction processing has become essential for their survival.
Why Canada Is Relevant?
Canada has not had a lot of great payment tools and Canada is significantly innovating in the mobile and small business space. There is a strong demand for these types of payment services in Canada because of pent-up demand.
E-commerce purchasing is growing at two times the rate of traditional retail, but within the e-commerce segment, 20 per cent takes place on a mobile device.
Braintree, launched in 2007 and has processed almost $5 billion of transactions a year in credit card payments. $1 billion comes through mobile devices.
The big banks will adjust their business models and won't want to lose business so be prepared for an interesting fight for dominance in this emerging space.